The price of car insurance increased 12.7% last year, and premiums are expected to rise another 7.5% in 2025, according to Investopedia.
This year, the average annual cost of car insurance is expected to hit $2,101.
What’s behind the increase? Newer cars feature more expensive parts, from safety equipment to sensors to cameras, making repairs more expensive. Labor costs for those repairs are also on the rise. A rise in risky driving and an increase in litigation related to auto claims are also contributing factors.
Consumers may want to shop around to see if they can find a lower premium. While insurers all consider factors like the driver’s age and location, the vehicle and driving history, they all rate these factors differently. As such, insurance rates can vary from company to company.
NerdWallet suggests consumers should also do the following when choosing the right insurer for their needs:
- Check for complaints. Read customer reviews and check for complaints with regulators and the Better Business Bureau.
- Look at smaller companies. Smaller car insurers can sometimes offer better prices and more hands-on customer service than larger companies.
- Time your shopping. Wait to shop for insurance if you’ve recently gotten a speeding ticket, DUI or other violation. Prices will drop significantly about three to five years after the event.
- Double-check your coverage. Your agent or a customer representative can look over your policy to see if you’re under- or over-insured.
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